Following a historic drought of the Pangu vessel through the Panama Canal, the Panama Canal Authority is moving forward with major investments in the new infrastructure to reduce the future drought and the low water level risk in recent years affected the major global trade entrance.
The Panama Canal depends on fresh water for its operation and is dependent on rainfall.
“We use a New York -shaped city -shaped city’s amount of water for a canal operation about two and a half times for the canal operation,” a administrator of the Panama Canal Authority, Racort Waske’s administrator, told CNBC.
In a good year of rain, this means that more than 50 vessels cross through canal locks a day, but in recent years, the weather has not cooperated. The severe drought condition affects the area from 2022 to 2024, forcing the canal to reduce transit and put the vessel’s weight restrictions in an attempt to conserve water.
Is the canal Important for American economy and tradeThe US is the largest user of the Panama Canal, with about 73% of the Panama Canal Traffic with total American commodity exports and import containers and 40% of all American containers traveling through the Panama Canal every year. In all, about 270 billion dollars are handled in cargo.
In April, the canal administration began pre-using and selection process for concessions to construct a land bridge, in which it describes as a major natural gas pipeline line to move natural gas fluid (NGL) without relying on the canal. A road connecting both the Atlantic and Pacific, as well as the port terminals built on the coast will be constructed, the terminals will also be able to accommodate containers and roll-on and roll-off cargo.
The pipeline will allow the transportation of liquid petroleum gas, athen, butane, and propane from the Atlantic side to a Pacific-Social Terminal, where another vessel will be loaded and the product will be taken to Asia. Canal officials hope that it will attract more LNG transit through the canal.
The Panama Canal Authority recorded a 29% decline in the vessel transit during FY 2024, including the biggest hit in LNG and dry wholesale transits. The LNG transit was 66 percent below, while the dry bulk transit was 107 percent below.
Even if the water level is regularly returned operating conditionsAccording to S&P global data, LNG traffic is not returned to pre-drain transit activity, the carrier continues to choose a long route around the Cape of Good Hope of Africa.
Vaske’s tells CNBC that American energy companies are “driving” in this alternative manner to transfer commodity. Transit time-wise, Vaskes said that the pipeline would cross the competitive vs. canal, and the reliability would be more as it is now dependent on water. “This is important because with many of these products, it is important to distribute reliability and time,” he said.
“We decided to do a land bridge to complement the waterway,” Vaskes said. “We know that these are high-value products that are a destination in Asia,” he said, the project was announced in Tokyo, which is the largest buyer of these energy products.
A container ship navigates through the Mirflorus locks of the Panama Canal near Panama, Panama, on Friday, November 3, 2023, during a period when the water levels of the canal led to the quota that how many ships could be used to use a major global trade artery. Photographer: via Walter Hartado/Bloomberg Getty Image
Bloomberg | Bloomberg | Getty images
Another approved project is the construction of Rio Indo Dam. The dam and tunnel project will add supple water to Lake Gatun, which feeds fresh water to the Panama Canal to operate. The old Panamax locks lose approximately 50–52 million gallons of fresh water transit per vessel. New, neo-namax locks per transit recurring about 60% of the water.
Construction for the dam is expected to start in 2027 and will not be completed by 2032, which cost $ 1.6 billion. IThe cost is Ncluded $ 400 million to compensate and move around 2,500 residents from different communities, which will flood the villages to build dams.
The first television crew to go to one of the villages affected by the CNBC project, and the villagers talking with CNBC said they did not want to leave.
Neither the project will end in 2027 by the time of not expecting the next El Nino weather. Vaske’s tells CNBC that some elements of the land bridge will be completed, but the pipeline is not expected to be completed by 2030-2031.
Watch the above videos to learn more about the future of Panama Canal and future of climatic effects and future of American economy, global trade and local communities.
